On the basis of the environmental tax literature, this article recommends a system of upstream taxes on fossil fuels, combined with refunds for downstream emissions capture, to reduce carbon and local pollution emissions. Motor fuel taxes should also account for congestion and other...

Gasoline and diesel fuel are heavily taxed in many developed and some emerging and developing countries. Outside of the United States and Europe, however, there has been little attempt to quantify the external costs of vehicle use, so policymakers lack guidance on whether prevailing tax rates...